Bangkok Post, Thailand
Tokyo’s trade priorities
Japan active on many fronts to take full advantage of globalisation, with EU pact a vital goal.
23rd April 2012
By Somporn Thapanachai
TOKYO : Achieving full free trade among its members by 2020 remains the stated goal of the Asia Pacific Economic Cooperation (Apec) group, but few expect it to materialise due to the non-binding nature of the agreement.
Members instead are building smaller free trade blocs within Apec, which will eventually be equivalent to a free trade area for Asia Pacific. For Japan, the preferred route appears to be the Trans-Pacific Partnership (TPP) initiated by the United States. The pact is intended to also cover the Asean+6 group that includes the 10 Asean members plus China, Japan, South Korea, Australia, New Zealand and India.
While the TPP has gained more momentum following strong promotion by the US, the Japanese government, businesses and academics have worked to ensure that Japan will become a member of the TPP pending the consent from existing members, particularly the US.
So far, nine countries have committed to support the TPP: Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, the United States and Vietnam.
Despite the outcry by Japanese farmers about wider liberalisation of trade in farm products, the TPP would help enhance predictability in trade and investment rules to create a win-win situation to all, said Yukio Edano, the Minister of Economy, Trade and Industry.
Professor Yorisumi Watanabe of Keio University said the TPP would focus on legal instruments that would ensure more certainty and predictability for member countries. Such features are lacking in the outline of an Apec trade pact set out in the so-called Bogor Goals in 1994.
He said the TPP would challenge Japan to reform its agriculture sector, in which 2.6 million farmers account for only 2% of GDP, compared with 70% from services and 20% from industry.
The average age of Japanese farmers is 66 years and few young people are entering the sector. More than 75% of Japanese farmers are defined as part-time as they earn other income from non-agricultural activities.
The Japanese government therefore wants to offer an income-subsidy programme to these part-time farmers so they will allow full-time farmers to work on their land to create economies of scale and efficiency in farm production.
Masakazu Kubota, senior managing director of Nippon Keidanren, agreed the Japanese farm sector must become more efficient through the consolidation of farmland, while also becoming attractive for young people.
Besides these regional arrangements, Japan has another 13 concluded bilateral economic partnership agreements, which are de facto FTAs, including the Japan-Thailand Economic Partnership Agreement that took effect in November 2007.It has another two ongoing negotiations with the Gulf states and Australia and is looking into talks with the European Union, as it wants to be on an equal footing with South Korea which has already secured a bilateral FTA with the EU, according to Prof Watanabe.
Under the Japan-EU pre-negotiation process, the EU wants Japan to work on three issues: the reduction of non-tariff barriers, the opening of government procurement, and putting 100% of farm products on the table for negotiations. Japan is hoping to formally begin talks in July.
While the EU is demanding improvement in Japanese government procurement rules, Japan believes its system is as open as the EU’s, so if the latter has problems it should raise the issue with the World Trade Organisation (WTO).
"If the negotiations between Japan and the EU are launched, it will be the largest FTA for the EU and become the most important FTA in the world. We have to see what will happen after the two countries can agree on the FTA," said the professor, who has spent a lot of time in Europe rallying support for his country’s goals.
Mr Kubota said Japanese products directly compete with those of South Korea in the US and the EU markets, with which South Korea already has FTAs. For example, Korean cars can be exported to these markets without being charged import tariffs while Japanese cars continue to face a 2.5% duty in the US and 10% in the EU.
"We want to achieve n equal footing with South Korea," said the executive of Keidanren, the private-sector organisation that has a vital role in shaping Japanese trade and investment policies.
The organisation has said that it is imperative for companies based in Japan to ensure business conditions are no less competitive than in other countries.
It recommended that the Japanese government participate in the TPP negotiations at the earliest possible date while also pursuing a Japan-China-Korea FTA and an Asean Plus Six pact, as well as swiftly starting negotiations with the EU.